Correlation Between FEDEX and Diageo PLC
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By analyzing existing cross correlation between FEDEX P 41 and Diageo PLC ADR, you can compare the effects of market volatilities on FEDEX and Diageo PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FEDEX with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FEDEX and Diageo PLC.
Diversification Opportunities for FEDEX and Diageo PLC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FEDEX and Diageo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding FEDEX P 41 and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and FEDEX is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FEDEX P 41 are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of FEDEX i.e., FEDEX and Diageo PLC go up and down completely randomly.
Pair Corralation between FEDEX and Diageo PLC
Assuming the 90 days trading horizon FEDEX P 41 is expected to generate 1.13 times more return on investment than Diageo PLC. However, FEDEX is 1.13 times more volatile than Diageo PLC ADR. It trades about 0.0 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.14 per unit of risk. If you would invest 7,837 in FEDEX P 41 on December 30, 2024 and sell it today you would lose (55.00) from holding FEDEX P 41 or give up 0.7% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 69.35% |
Values | Daily Returns |
FEDEX P 41 vs. Diageo PLC ADR
Performance |
Timeline |
FEDEX P 41 |
Diageo PLC ADR |
FEDEX and Diageo PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FEDEX and Diageo PLC
The main advantage of trading using opposite FEDEX and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FEDEX position performs unexpectedly, Diageo PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Diageo PLC will offset losses from the drop in Diageo PLC's long position.FEDEX vs. Torm PLC Class | FEDEX vs. Quaker Chemical | FEDEX vs. BW Offshore Limited | FEDEX vs. Skillful Craftsman Education |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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